tv [untitled] May 6, 2011 10:00am-10:30am PDT
it allows us to claim additional reimbursements. commissioner torres: $28 million? hong >> $20 million. -- commissioner torres: and you know what impact it will have on the city's budget? >> just in the projection of what the service he will be -- need will be, it has been failry stron -- fairly strong. they could talk to the governor about that. commissioner torres: is there a
compromise? >> not that i am aware of. >> there has been some additional revenue that has come in from the extra water. additional revenue that has come into the coffers because of the additional water? >> we're looking at the revenue line items. we will have more in a couple of weeks. >> doesn't affect the budget negotiations -- or doesn't it affect the budget negotiations? >> we are trying to update and try to see what that balance is. >> because the budget has
already been submitted, those numbers -- >> it does not tend to be. the general fund the side, you're trying to make it through the year. we tend to have that longer-term infrastructure program look at the world where we know that we have to have some extra money. or if you remember, looking the last several years, it was not that year. we tend to have a longer view of it. >> the other question i had was around the subsidy question. is about opportunity to start to have a bit of conversation with the mayor's office about where we are in the budget cycle? it seems that as they are
looking at the example that you put forward, which general fund department should have access or should be qualified, it should be part of the conversation as well? >> i can assure you that we are. we lived through what it would mean for additional energy, and we point of the work through the city service are the third. there is energy efficiency spending, and how we can save the most on power and cost. i think they are very appreciative of that and recognize that. it is never a bad time to talk about it. >> i think we should be talking about it at every opportunity. president vietor: other questions or comments? next item, please.
>> the consent calendar. these are recommended for action. as a commissioner wish to remove any of the items from the consent calendar? and you wish to of the calendar? -- do you wish to move the calendar? i will read the items. >> i have read them. [laughter] >> the public has not. march 7, 2011, approved for a immediate replacement of market street. item b, authorizing the general manager to apply for a proposition grant funding% to disaster and prepared this as
stipulated. they will provide matching funding up to the 2.2 $4 million. a memorandum of agreement with -- $2.24 million. the ground water projects. the approved modification of the public utility commission contract. heating, ventilation, air conditioning. the mechanical services to accomplish mechanical systems in the city building. this contract modification will allow energy efficiency and mechanical systems facilities.
local water or replacement contracts. the installation to the lowest qualified bidder. except for construction water enterprises, wd 2493, of approve modification with actual quantities increasing the contract and authorizing final payment. president vietor: there has been a motion and a second. is there any public comment on the consent calendar? all in favor? the motion carries. >> the next item begins regular business.
the presentation and discussion of proposed wholesale rates and the environmental surcharge. >> i would like to provide a brief update for you today about the wholesale rates as part of the annual budget process. this year, as we discussed previously and provided a great alternative memos to the commission, as well as to all wholesale customers, we looked at the current rate setting methodology and we looked at what other alternatives could be to increase revenue stability. will looked at a monthly approach as well as the annual deliveries approach. we basically wanted to solve the
equation that would result in the same number of revenue dollars being recovered, but with increased certainty that they would come in the same year that we expected them to come in. we will be asking you to vote on these on the may 10 meeting. the high level summary is on page 3 of your package as was the briefing to you. the wholesale revenue requirement, we want to increase our confidence. the retail side of water contensumption, the wholesale hs
shown a great deal of conservation and lower sales. we have been dealt in our sales of about 5% every year over the last four years. the approach to looking at this was also to prepare ourselves for the next comes sale. we have had a very good story to tell. they are very comfortable with our credit. they are always looking at ways for the entity to provide reliable and predictable revenue streams. why is that important? as agencies look at our financials, they want to make sure that we are scrutinizing any of our shortfalls, and what
the plan is in order to address the revenue projections, why that matters, we have such a strong investment rating that allows us to borrow very inexpensively and to save ratepayers a great deal of money. the adjustment of a single notch down word, some additional conservatism would result in about $10 million of additional costs. that is something that we always want to ensure we are providing revenues in a persistent revenue stream to keep that strong rating. the dialogue with the customers has resulted in written responses that are attached before you. that would be 26 wholesale
customers that would be part of the group. their preference over zero was that while there are appreciative of the staff taking time to look at alternatives for revenues, and they wanted to continue to do that for next year's rate saving process. the " here -- quote here from mr. jensesn is that -- jensen is that we can meet our quota and provide a means for existing methodology. what you see in your packet today is what our intention is to bring to you for final consideration, that would be a continuation of our existing methodology, and it would mean that we would need to change wholesale rates to increase
them. that would be consistent with us recovering the balance in account with prior years over the next four years. and specifically, $25 million over next year's rates. and i personally called and talked to most of our wholesale customers about what their thinking was on revenue projection as well as input from the staff. based on a continuing assumption of an additional 5%, we presume deliveries [unintelligible] we think this will be a very solid story when we go to the rating agencies. we will let them know that we have tightened up and are even more conservative.
have also said, what about an additional insurance policy? we will be coming to you and asking for your consideration of a new item this year, a trigger reset. so if there are even less deliveries, which would put into place a trigger mechanism to allow rates to ratchet oup to 290, effective with 2012 rates. that was the first eisenhower hall that will come before you. -- that is the first item that will come before you. and the proposal for an untreated water discounts.
this is in agreement with the county district. particularly, it was to make it consistent for them to pay for only the services. in particular, they are a customer that does not receive treated water. what we have done is gone through our financials in the budget issues and said, what to the discount factor be for this customer that does not receive treated water? we received no protests. we received one letter from the wholesale customers. they thought it was consistent and did not protest the proposed rate. the discussion has been very productive and i would say collaborative with a number of
customers. in addition, there is one last thing. there is the environmental enhancement surcharge. that is the second part of the supply allocation discussion that you have late last year. this says is a provision of the water supply agreement that requires the commission to look at the establishment of an environmental surcharge effective july 1, 2011. and the surcharge would be levied only if deliveries from the system exceeded 265 ngd. we have looked the likelihood of that being relatively low. nevertheless, we are still required to propose that for
consideration. it is broken into two parts. the other total allocation collectively being -- it will be reviewing the proposed rates. but in particular, what we're looking to propose at this point is a 50% surcharge, so it will be an additional 50% cost for any water that is used of the supply allocation. it makes higher use of water exceeding the supply allocation factor by individual customers 50% more expensive. that would go into a dedicated fund that the commission will be asked to forward to the board of
supervisors for adoption. in to be used for environmental enhancements. we have not receive any protests or comments to date from wholesale customers. they appreciated the proposed tier structure, because more water that is used in excess, the more surcharged incentives you have to not use its. this proposal -- to not recognize that. tiering would be up to 1 million gallons over, it would be 50%. over 5 million will be traveling the rate -- tripling the rate.
considering our current usage of water, it seems highly unlikely that we will ever get into this. but this contract requires us to have a rate. >> the next steps, i will provide the commission had water sale of a 4 april that will be in advance of the maid had adoption. the public hearing is scheduled for may 10. at that time, if approved, the surcharge legislation will be forwarded to the board of supervisors for adoption. this also tease us up for the investor briefings and presentation reviews in june and july for the bond sale. we look forward to another successful bond sale. president vietor: thank you.
questions? comments? mr. jensen. >> art jensen, think you, commissioners. let me start by saying that this is a delicate issue to address. the agency's of a wholesale basis, there are different opinions from time to time. they have certain things in common. the also desire or require certainty. they also issue bonds. they are rated by the same agencies as yours. they have a desire for the same kind of certainty that the puc does. a study mentioned, that reflects
a potentially is more if your rates are increasing at your end. one of the things that i think that the agencies feel about the proposal, this would be an accurate statement. we meet with them regularly in terms of their feelings, the proposal and a packet shows the assumption of 135 resulting in a rate of $2.80. the rate goes up to 90. several of them have asked me, what are the other combinations within the historical rate setting approach? what are the other alternatives? can we see what that would look
like on a graph of historic use? what if the trigger -- or what if the rates were set at 140 in the trigger at 135. could some of those alternatives be examined and available to them? without taking a position on what the best way to address it is, the information would be helpful to them. think you for considering that. >> of the key thing is the delivery and the assumption of about deliveries. at the end of february, we were on target to deliver about 143 million gallons a day to the wholesale customers. march was down an additional 12%. what is conservative?
we're still trying to figure out what is going to happen over the next several months. next year actually being a wet year, we are trying to get a handle on how we can buy from them as opposed to us. [chime] president vietor: as far as the request to provide different scenarios, would that be possible? >> wheel will go back over the 30-year purchasing history. it is very volatile. a lot of the customers have opportunities for other purchases or sources. we also have customers that are subject to minimum purchase requirements. we factor that into it. we are happy to run some areas
and work with mr. jensen and his staff. back in the 87-92 drought, we have not seen these deliveries to the wholesale customers. president vietor: it would be interesting to see individual way as well. and historically, and the projected. somehow factoring in the purchases, the non-santhe variay which they move. we have it. we have done it. we are happy to provide it. president vietor: thank you. >> we did bring to you that known quantity approach.
a number of our customers applauded that he reread we were not planning on bringing that back, obviously. we also discussed are ratcheting adjustments. that is not something that was welcomed by much. what we are welcoming back is -- generally the way we have always done it, which is one chance to reset during the year. that would provide some rate stability, but at least something this year -- if interest rates are going down, b.b. -- the able -- to be able to set rates. that is still out there. there are different points of view on that. again, everybody would like certainty today. that is the one remaining issue. in general, there was little
agreement to go with the new methodology. president vietor: and if we set it on an annual basis, if there is a major drought, something happens, then there is an opening? >> the contract allows for a drought surcharge to kick in. it is designed to get around that kind of emergency drought situation, because the rate increases need to be the same for the public in retail customers. we were raising our rates about 15% a year. we have that building surplus accounts, where the hotel customers are owing us money now for the prior year delivery. we have to catch up at some point. that is the difficulty with that. president vietor: on the
environmental surcharge, has that been distributed, discussed? this is the first time it is coming up on the agenda. i would be curious what the water stored my thing about that -- what the water this keyword would think about that, just before we vote on it. >> we have reached out to various environmental stakeholders. the report has been available since february. we will continue to do that over the next 30 days. with the comments we have heard, from environmentalists, there is an appreciation for the tiered approach because it provides incentive to do it. it also makes the water costly enough to provide incentives to do all the low cost, in energy,
water conversation you can still -- you can do. the top tier is such a high dollar amount. >> sounds good. commissioners? any public comment on this item? >> we have no speaker cards. >> hearing none, next item. >> the next item is the presentation and discussion of the treasure island redevelopment project informational presentation. no commission action at this time. this is an informational presentation by the mayor's office of work force and economic development. >> mr. garland. >> good afternoon, commissioners. we are giving you an overview of the treasure island project. the question that arises in my mind is why do you care? you care because he will have to
approve numerous documents associated with the development. they include the interagency cooperation agreements. what we will be presenting today is an overview of the project. imbedded in that, are decisions that you as the puc will make, mainly on the water and waste water side. there is also an analysis we will be performing on whether we become the power provider for treasure island. that is also in the presentation -- how power gets to the island and how it will be distributed. we will be doing the presentation today. april 26, we will come back with the documents for you to approve to move this project forward to the board of supervisors.
april 25, it is being heard at the planning commission. that is the first step with it being removed -- with it being approved. you'll have to adopt the mitigation document as to approve all the other documents associated with the development. i am going to turn it over to mike to start the presentation. we will be coming back to you hopefully on april 26. >> good afternoon, commissioners in with the office of work force and economic development on behalf of the treasure island redevelopment authority. we are going to do three things today. we wanted to give you an overview of the development project as it stands today, and then walk you through the infrastructure and systems that would be provided for treasure island in europe when not islands and touch briefly